Fighting vested interests will provide real challenge for incoming leaders

Source:Global Times Published: 2013-3-10 16:43:01

Fighting corruption must be a flagship policy for General Secretary of the CPC Central Committee Xi Jinping - especially after the Bo Xilai incident last year. Xi and his colleagues realize that corruption could break the cord that ties the Party and the people together, and the Party risks looking as if officials rule for themselves rather than serving the people.

This has to be the first task - and in some ways it is an easier target than increasing openness and extending freedoms.

Back in 2002, Jiang Zemin warned at the 16th CPC National Congress that not dealing with corruption could spell the end of the Party. You can actually go further back to when he took power in 1989 to find numerous speeches about the importance of dealing with corruption if Party rule was to survive.

This theme was continued throughout the Hu Jintao-Wen Jiabao era. In 2004, the CPC Central Committee produced a rather damning report on the Party's ruling capacity. Referring to official studies of the collapse of communist party regimes further west, it argued that "we must prepare for danger in a time of peace, from start to finish, carry out good government for the people," and argued that "constructing a clean and honest administration and fighting corruption are a matter of life and death for the Party."

But while we've seen some moves to act against corruption, we haven't really had any firm statement about what this wider reform agenda might be. My guess is that we have to wait until after the second round of leadership changes at the National People's Congress before we move on from the symbols and signs into actual policy changes.

We might even see some changes to the structure of the State system in terms of merging ministries and changing the authority of some institutions to pave the way for these changes. What happens in March could be as important as what happened at the 18th CPC National Congress last year.

There is a potentially serious problem emerging that links land and property prices to local government finances to the banking system. Many local governments are going to face big problems in the years ahead paying off the debts that their local investment companies incurred in 2009 as the banks spread liquidity as China responded to the impact of the global financial crisis.

Local governments have increasingly sold land use rights as a means of gaining revenue - it's grown enormously in the last three or four years as a source of local government finance.

Rising land prices also make it easier to pay off some of the loans. And with depositors getting low returns on savings in banks, they are looking for other ways of raising money - and investing via trusts and so on in real estate is seen as one way of doing this; but it's risky.

Any reform is obviously going to create losers as well as winners, especially since there are powerful vested interests that are doing very well out of the status quo.

The leadership will first have to work out the technicalities of what needs to be done and then negotiate and navigate through the different interests and powers that exist in China today. And they will have to do this while continuing to fight corruption and keep the support of the people.

These are the key political tasks. Of course it's not impossible to push through with these reforms - look what has happened to date. But it's not going to be easy.

The article was compiled by Global Times reporter Yu Jincui based on an interview with Shaun Breslin, director of Centre for the Study of Globalisation and Regionalisation, Department of Politics and International Studies at the University of Warwick.



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